Market Statement of the Slovak Republic
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Market Statement of the Slovak Republic to the 78th session of the ECE Committee on Forests and Forest Industry (COFFI), held in Geneva, Switzerland, from 4 to 6 November 2020 Ministry of Agriculture and Rural Development of the Slovak Republic National Forest Centre – Forest Research Institute Zvolen, October 2020 1 1. General economic trends affecting the forest and forest industries sector (brief description) Basic national and sectoral macro-economic indicators, including the overview of most important forest sector indicators in 2019 are given in Table 1-1. The growth of the Slovak economy continued also in 2019. The value of Gross Domestic Product (GDP) rose at current prices by 5.1% to €94.17 billion. The main reason for GDP growth was foreign demand, and personal consumption was also risen, particularly in the services sector. Sectoral GDP constituted 0.69% of national GDP. Growth of investment at a national level by 8.0% was influenced especially by the growth of the Slovak economy and drawing on funds EU. Investments into forest estate and production operations totalled €61 million, representing a 27.1% increase from the previous year. At a national level, the percentage of sectoral investment increased from 0.25 to 0.30% of national investment. The sectoral workforce decreased by 0.55% as compared to 2018. Average monthly earnings of employees in economy of the SR increased year-on-year by 7.8% while in forest sector by 10.6%. 1-1 Trends of selected indicators in forestry and its comparison with Slovak national economy Year Indicator Unit 2010 2015 2017 2018 2019 GDP in current prices 68.09 79.76 84.52 89.61 94.17 billion € Of that: Forest Sector 0.39 0.57 0.61 0.62 0.65 Increment of GDP % 6.2 4.6 4.3 6.0 5.1 Investment in current 14,396 18,918 17,899 18,765 20,274 prices mil. € Of that: Forest Sector 41 51 52 48 61 Employment thous. 2,170 2,267 2,372 2,420 2,450 Of that: Forest Sector persons 23.3 21.4 19.6 18.0 17.9 Average monthly salary 769 883 954 1,013 1,092 Of that: Forest Sector 632 868 914 980 1,084 Value-added labour € 27,543 29,099 32,304 33,485 34,407 productivity Of that: Forest Sector 13,102 19,414 18,986 22,200 17,239 2. Policy measures taken in your country over the past 18 months The Program Statement of the Government of the Slovak Republic from April 2020 adopted a strategy for rebuilding of the management in most forests towards "closer to nature" concept. During this election period, the government is committed to increase the share of the forests managed in accordance with principles of close to nature management. The instrument of reconstruction should be the management measures and procedures in line with the Pro Silva concept. The result should be stable forests with a balanced ecological, environmental, economic and social aspect. Reconstruction of Slovak forestry towards "closer to nature" should be a long-term process, which, however, is "necessary and cannot be postponed without devastating impact". Therefore "closer to nature management" becomes the basic strategy of the state in forest management. The above-mentioned reconstruction will effectively support the adaptation of forests to climate change and their contribution to sequestration of atmospheric carbon, calamity resistance, as well as species, age and biotope diversity. Their erosion control, water-retaining and soil- forming functions will be strengthened and, in accordance with the results of epidemiological 2 studies on the beneficial effect of forests on strengthening immunity, their health and hygiene function - which is particularly relevant today. The important wood production function of forests will also be preserved to a sustainable extent, where the share of higher quality assortments is to be increased. A state forest "eco-fund" is to be established to support close to nature management and ecological functions. Frameworks for the creation of pilot markets for selected forest ecosystem services should be prepared. Mentioned measures should increase the efficiency of forestry activities, especially the working professions, whose supply and quality are currently critically low. The eco-fund should also support the introduction of modern technology as well as the construction of forest roads meeting strict environmental criteria, which are a necessary condition for the closer to nature management. Additional sectoral funding, in line with the government's "Value for Money" project, also reflects "New generation EU" measures to revive the economy and transform it into a green, digital and resilient economy. The following areas have been identified that require additional funding: Mitigation of forest enterprise losses due to catastrophic beetle bark outbreaks; Improving the existing forest road network; Improvement of machines and technologies used in forests sector; Improving water retention measures in the sector. 3. Market drivers Slovakia is an open economy and its development depends on demand in foreign markets, especially the EU markets. This fact was the reason also for economic growth in previous years up to 2019. Next development will depend on the post-COVID19 situation and in the development of demand in the markets of major trading partners. These factors will also affect the area of wood production and processing in Slovakia. It will be needed to secure realization of relevant goals and measures above mentioned action plans for implementation of National programme of utilization of wood potential (NPUWP) as well as National Forest Program (NFP). In particular to implement measures to increase the competitiveness of the wood processing sector, focusing mainly on the development of higher added value sectors and those where there is a negative trade balance, such as the production of veneers (mainly non-coniferous), the production of fibreboard and Oriented Strand Board (OSB) boards, components for wooden houses, secondary paper products, and recycled paper processing. In order to achieve a higher quality and degree of finalization of wood processing, it is also necessary to provide support for investment in production technologies also from public sources. Investment in technologies will contribute to higher added value production and higher wood finishing in domestic conditions, but also to increase labour productivity and competitiveness. Therefore, it is also necessary to encourage the domestic processing of raw wood and sawnwood; to reduce timber exports, in particular by increasing the capacities of the domestic wood processing industry, in particular in the field of high quality wood processing and improving the consumer-supply relations. It is necessary to encourage the arrival of an investor into the processing capacity of the higher quality hardwood (non-coniferous sawnwood). 3 4. DEVELOPMENTS IN FOREST PRODUCTS MARKETS SECTORS a. Wood raw materials Timber supply In 2019, the total supply of raw timber reached a volume of 8.96 million m3. Timber sale is the most important source of earnings to preserve forest functions and maintain employment in the forest sector. It provides approximately 80% of the revenue and earnings for forest managing enterprises. In addition to the forest sector, timber is also a basic raw material for the timber processing industry (TPI), thus securing employment, earnings and revenue also in this sector of the national economy. Table 4a.1 Log grade structure of softwood raw timber supply – SOFTWOOD Own con- Percentage Slovakia Export Total Grade sumption of grades Thousand m3 (%) I grade logs 0.12 0 0 0.12 0 II grade logs 5.70 0 0 5.70 0.11 III grade logs 2,941.92 58.93 59.96 3,060.81 57.14 Paper-pulp & abrasive 10.62 0.00 0.00 10.62 0.20 timber Mining timber 7.67 7.61 0.00 15.28 0.29 Thin poles 4.95 0.00 0.21 5.16 0.10 Pulpwood 1,439.16 14.76 7.59 1,461.51 27.29 Energy wood 71.53 0.00 7.08 78.60 1.47 Fuelwood 246.23 0.85 3.02 250.10 4.67 Stumpage 246.94 11.97 1.25 260.16 4.86 Raw trunks 189.93 17.58 0.79 208.30 3.89 Total 5,164.76 111.70 79.89 5,356.35 100 Percentage (%) 96.4 2.1 1.5 100 - State sector I and II grade logs 0.43 0 0 0.43 0.02 III grade logs 1,500.86 12.96 1.08 1,514.90 56.64 Pulpwood 796.87 1.85 0.56 799.27 29.88 Energy wood and fuelwood 103.75 0.00 6.61 110.36 4.13 Stumpage 160.99 0.00 0.00 160.99 6.02 Raw trunks 62.57 2.78 0.17 65.51 2.45 Other grades 15.48 7.61 0.17 23.26 0.87 Total of state sector 2,640.95 25.21 8.58 2,674.73 100 Percentage (%) 98.8 0.9 0.3 100 - Non-state sector I and II grade logs 5.39 0 0 5.39 0.20 III grade logs 1,441.05 45.97 58.89 1,545.91 57.65 Pulpwood 642.30 12.91 7.03 662.23 24.70 Energy wood and fuelwood 214.00 0.85 3.49 218.34 8.14 Stumpage 85.96 11.97 1.25 99.17 3.70 Raw trunks 127.36 14.81 0.62 142.79 5.32 Other grades 7.75 0.00 0.04 7.79 0.29 Total of non-state sector 2,523.81 86.50 71.31 2,681.62 100 Percentage (%) 94.1 3.2 2.7 100 - 4 Table 4a.2 Log grade structure of softwood raw timber supply – HARDWOOD Own con- Percentage Slovakia Export Total Grade sumption of grades Thousand m3 (%) I grade logs 2.82 1.39 0 4.22 0.12 II grade logs 10.97 5.70 0.01 16.67 0.46 III grade logs 1,233.59 115.81 7.31 1,356.71 37.68 Mining timber 5.60 0.21 0.00 5.80 0.16 Thin poles 2.04 0.00 0.54 2.58 0.07 Pulpwood 1,727.56 158.20 3.86 1,889.62 52.48 Energy wood 45.04 0.00 5.15 50.19 1.39 Fuelwood 213.94 1.76 5.04 220.74 6.13 Stumpage 41.36 0.28 0.15 41.79 1.16 Raw trunks 12.08 0.00 0.12 12.20 0.34 Total 3,295.00 283.34 22.19 3,600.52 100.00 Percentage (%) 91.5 7.9 0.6 100 - State sector I and II grade logs 5.14 1.93 0 7.07 0.32 III